Can the CSL (ASX:CSL) share price reach pre-COVID highs?

CSL has had a tough couple of years from COVID-19.

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Key Points

  • CSL shares continue to face challenging market conditions
  • Recent placement a factor in share price weakness
  • Brokers put forward their 12-months price targets for CSL shares

The CSL Limited (ASX: CSL) share price has sensationally been dumped amid a broader market sell-off by investors.

Year to date, the global biotech’s shares have fallen by around 10%. By compassion, the S&P/ASX 200 Index (ASX: XJO) has lost 4% during the same timeframe.

Looking at Monday’s market close, CSL shares edged 0.74% lower to $262.57 apiece.

What’s weighing down CSL shares?

A couple of factors have had a negative impact on the CSL share price, sending investors to hit the sell button.

Firstly, the rapid spread of the COVID-19 Omicron variant has spelled a sluggish economic recovery for Australia. A surge of cases has led Western Australia closing its borders, as well as renewed restrictions across the country.

With the fear of Omicron spreading, this has most likely led to reduced foot traffic in CSL’s plasma collection centres.

In addition, the company announced an institutional placement to raise $6.3 billon to purchase Vifor Pharma in December. This was Australia’s second largest equity raise, behind Telstra Corporation Ltd (ASX: TLS) for 2021.

The company also launched a $750 million share purchase plan, offering the same terms to retail investors at $273 apiece.

With another 23.1 million new CSL shares brought onto its registry, this has inevitably diluted shareholder value. The company added more than 5%, giving a current total of 478.75 million shares outstanding.

Can CSL shares reach pre-COVID highs?

Before COVID-19, CSL shares were known for their high-growth and defensive qualities. The company’s share price had a healthy track record of outperforming the benchmark index, which attracted investors.

In February 2020, CSL shares hit an all-time high of $342.75, before losing more than 20% within a month.

Fast-forward to today, a number of brokers have weighed in on the CSL share price.

Last month, the team at Morgans raised its 12-month price target by 3.2% to $334.70 for CSL shares. Based on the current share price, this implies an upside of about 27.5% for investors.

Analysts at Citi had a more bullish outlook on the company’s shares, improving its rating by 4.6% to $340. From where CSL trades as of yesterday, it represents an uplift of 29.5% over the next 12 months.

However, the latest broker note came from Jefferies last week, cutting its position on CSL shares by 2.3% to $335.

Clearly, all these brokers believe that the CSL share price will return to pre-COVID highs within the next 12 months.

A recap on the CSL share price

No doubt it has been a frustrating time for CSL shareholders. Traditionally, its shares outperform the broader market, however, this has not been the case since the onset of COVID-19.

Over the past year, the company’s shares have failed to take off, posting a loss of almost 5%.

On valuation grounds, CSL is the third largest company on the ASX with a market capitalisation of roughly $125.70 billion.

Should you invest $1,000 in CSL right now?

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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